Articles authored by Sonu Varghese
The Labor Market Is Holding Up, But Inflation Is the Real Story
We’ve gotten a flurry of economic data over the past week, covering the labor market (JOLTS, the Employment Cost Index, ISM employment sub-indexes), personal income, and the broader pulse of the economy via the ISM Manufacturing and Services surveys. Layered on top of that, the big tech hyperscalers all reported earnings. While a lot, the …
The AI Wave Continues, and It’s a Big One – 10 Charts Showing the Impact
We discussed the artificial intelligence (AI) wave in our 2026 Outlook and said we believed the best approach for investors was to ride it, using an equity overweight and broad diversified exposure. Five months later, that picture hasn’t changed—if anything, it’s only strengthened. AI continues to have a big impact on the economy. When I …
Kevin Warsh as the Next Fed Chair
Kevin Warsh sat before the Senate Banking Committee on Tuesday for the start of his confirmation hearings as the next Chair of the Federal Reserve. He sidestepped most of the political gotchas, reiterated his commitment to Fed independence, and outlined what amounts to a reform agenda: replacing the Fed’s inflation models, shrinking the balance sheet, …
There’s No Puzzle as to Why Stocks Are at All-Time Highs
The S&P 500 and Nasdaq hit new all-time highs last week, and as our friend Sam Ro wrote on his substack (T’ker), this isn’t sitting well with many people. There’s also a steady stream of commentary along the lines of “this doesn’t make sense” and “risk assets are detached from reality.” Or that markets are …
Consumer Sentiment Sinks as Inflation Outruns Wages
Consumer sentiment has collapsed irrespective of which metric you look at. The University of Michigan consumer sentiment index just crashed to the lowest level in the survey’s history – even below what we saw during the depths of the Great Financial Crisis in 2008-2009, Covid in April-May 2020, and even the stagflationary 1970s. Surely things …
We Have a Serious Inflation Problem (Duh!)
It shouldn’t be a surprise that the Middle East crisis has sent oil prices soaring, with the impact immediately felt on gasoline and diesel prices. We just got our first batch of inflation data that incorporates this, with the headline consumer price index (CPI) rising 0.9% in March (equivalent to an 11% annualized pace). The …
A Ceasefire and a Relief Rally, But the Bond Market Isn’t So Sure
News of a potential ceasefire deal hit Tuesday evening, and markets didn’t wait around. The S&P 500 surged 2.5% on Wednesday, the Dow gained 2.85%, and the Nasdaq rallied 2.8%. The S&P 500 is now down less than 1% year-to-date. The Dow is actually in the green. That’s the good news, and it’s worth acknowledging. …
The Labor Market Remains Delicately Balanced While an Inflation Crisis Looms
The crisis in the Middle East is in week six right now, and it’s not hyperbole to say that the world is on the edge of an energy crisis. Oil prices have surged over the past several weeks, with the price of WTI (the US benchmark) surging over $100/barrel last week—it was at $65/barrel on …
When Your Diversifiers Don’t Diversify
The recent market pullback has offered a useful reminder: in certain environments, traditional safe havens don’t behave the way you’d expect. Since the Middle East conflict escalated on February 27, both bonds and gold have failed to provide much cushion, and understanding why matters more than the headline. Bonds: The Inflation Problem Treasury yields have …
It’s All Transitory (On a Long Enough Timeline)
Life is transitory, and so are inflation shocks (caveat: on a long enough timeline). The Federal Reserve (Fed) held rates steady in the 3.50-3.75 range at its March meeting, as expected. But all eyes were on the Fed’s updated Summary of Economic Projections (the “dot plot”), where each of 19 members jot down their estimates …